Krispy Kreme (DNUT) FY2025 10-K Risk Factors: 6 New, 6 Dropped

What the changes say

Turnaround plan now emphasizes de-leveraging, margin expansion, fresh delivery, digital sales, retail sales, and international franchise growth.
A $356.0 million non-cash goodwill impairment charge highlights heightened asset-valuation risk.
New risks focus on franchisee compliance, international partners, channel expansion, strategic execution, and tax-law changes.
Personnel language now concentrates on leadership departures, succession planning, turnover, and management disruption.

What changed since the prior 10-K

New

NewRisks Related to Executing Our Business Strategy
We may be unable to successfully execute our business strategy, including our turnaround plan
The turnaround could fail to deliver global growth, profitable margins, fresh delivery and digital expansion, retail sales, or franchisee support.
NewRisks Related to Executing Our Business Strategy
Our past strategic transactions have not always yielded, and future strategic transactions may not yield, the anticipated benefits, and could negatively impact our reputation and have a material adverse effect on our business, financial condition, and results of operations
Strategic transactions may produce further goodwill or long-lived-asset impairments, following a $356.0 million goodwill charge in fiscal 2025.
NewRisks Related to Executing Our Business Strategy
We have limited influence over the operations of our franchisees and subfranchisees, and any failure by them to operate effectively or to maintain safety and quality standards in compliance with applicable law could have a material adverse effect on our operating results and reputation
Franchisees may fail to meet operating, safety, quality, privacy, cybersecurity, or strategic requirements that Krispy Kreme cannot directly control.
NewRisks Related to Our Global Expansion and Growth
Our future growth and profitability will depend on our ability to successfully accelerate international development with strategic partners and joint ventures
International expansion with franchisees and joint ventures may underperform because new markets have different competition, tastes, spending, and brand-building requirements.
NewRisks Related to Our Global Expansion and Growth
We face risks as we continue to focus on profitable expansion of our fresh delivery and digital channels
Fresh delivery and digital expansion may be constrained by manufacturing, logistics, regulation, retail partners, technology, workforce, and third-party delivery platforms.
NewRisks Related to Regulation and Litigation
Changes in tax laws and regulations could have a material impact to our tax expense or cash tax obligations
Tax-law changes, differing jurisdictional rules, or tax-authority challenges could increase Krispy Kreme’s tax expense, cash taxes, or compliance costs.

Dropped

DroppedRisks Related to Executing Our Business Strategy
We periodically assess and may engage in mergers, acquisitions, full or partial divestitures, joint ventures, strategic partnerships, minority investments, or other strategic initiatives to execute on our growth strategy. We make these decisions based on individual circumstances
DroppedRisks Related to Executing Our Business Strategy
Our franchisees may affect our operating results and reputation
DroppedRisks Related to Our Global Expansion and Growth
We face risks as we continue to focus on expansion of our omni-channel business model
DroppedRisks Related to Our Human Capital
As our business continues to grow, it becomes increasingly challenging to identify and hire a sufficient number of employees and provide comprehensive training to ensure consistent product quality and outstanding consumer experiences worldwide
DroppedRisks Related to Ownership of our Common Stock
Certain provisions of Delaware Law, our certificate of incorporation, and our bylaws and the Investor Rights Agreement could hinder, delay, or prevent a change in control of us, which could adversely affect the price of our common stock
DroppedRisks Related to Ownership of our Common Stock
We may be unable to pay dividends on our common stock
Risks from mergers, acquisitions, divestitures, joint ventures, partnerships, investments, and other strategic initiatives.

Reworded

100% rewrittenRisks Related to Executing Our Business Strategy
We may not realize the anticipated benefits from past or potential future acquisitions, divestitures (including refranchising), investments, or other strategic transactions
The risk now specifies transaction availability, financing, acceptable terms, and successful transition and integration, rather than providing only a general benefits warning.
Was: We may not realize the anticipated benefits from past or potential future acquisitions, divestitures, investments, or other strategic transactions
98% rewrittenRisks Related to Our Human Capital
An inability to recruit and retain personnel could have a material adverse effect on our operations
The focus shifts from broad labor shortages and product-service staffing to executive departures, succession planning, leadership transitions, turnover, and culture.
90% rewrittenRisks Related to Regulation and Litigation
Our annual effective income tax rate can change materially as a result of changes in our geographic mix of U.S. and foreign earnings and other factors, including changes in tax laws and changes made by regulatory authorities
The risk now emphasizes geographic earnings mix, jurisdictional losses and net operating losses, and volatility in the effective tax rate.
87% rewrittenRisks Related to Executing Our Business Strategy
Our reputation and brand image are essential to our business success and a failure to protect our brand image could have a material adverse effect on our business, results of operations or financial condition
The risk now emphasizes maintaining brand standards across markets and channels, while retaining the threat of rapidly spreading digital misinformation and negative commentary.
Was: Our reputation and brand image are essential to our business success
86% rewrittenRisks Related to Executing Our Business Strategy
Our significant indebtedness could adversely affect us, including by decreasing our business flexibility and increasing our interest expense
The risk adds restrictions on acquisitions and divestitures and exposure to unhedged variable-rate borrowings, alongside debt-service and refinancing pressures.
Was: We have incurred significant indebtedness, which could adversely affect us, including decreasing our business flexibility and increasing our interest expense
82% rewrittenRisks Related to Our Global Expansion and Growth
A key portion of our growth strategy depends on opening new and maintaining existing Krispy Kreme shops and Points of Access both domestically and internationally
The risk now identifies fresh delivery doors and specific expansion obstacles, including regulation, permits, commodity costs, and securing suitable shop locations.
Was: A key portion of our growth strategy depends on opening new Krispy Kreme shops and Points of Access both domestically and internationally
67% rewrittenRisks Related to Food Safety and Consumer Preferences
Our business may be adversely affected by food safety issues, including food-borne illnesses, tampering, contamination, or cross-contamination
The risk adds potential foodborne injuries and acknowledges the company’s food-safety system may be inadequate, while highlighting fresh delivery and digital channels.
64% rewrittenRisks Related to Our Supply Chain
Our reliance on a single vendor for nearly all distribution of materials and supplies in the U.S. and Canada poses risks to our and our franchisees’ ability to make doughnuts if the vendor fails to provide these materials and supplies for any reason
The risk adds distributor contract breaches and the possibility that suitable alternatives to BakeMark cannot be found quickly or at all.
Was: Our reliance on a single vendor for nearly all distribution of materials and supplies in the U.S. and Canada poses risks to our and our franchisees’ ability to make doughnuts if the vendor fails to provide these materials and supplies in accordance with our agreement
63% rewrittenRisks Related to Regulation and Litigation
Furthermore, we may face significant liabilities from any such lawsuits or claims that result in unfavorable judgments or due to litigation costs, regardless of the final outcome
Was: Furthermore, in the event that any such lawsuits or claims result in unfavorable judgments or due to litigation costs, regardless of the final outcome, we may face significant liabilities
60% rewrittenRisks Related to Regulation and Litigation
The full realization of our deferred tax assets may be affected by a number of factors, including future earnings and the feasibility of ongoing planning strategies
60% rewrittenRisks Related to Food Safety and Consumer Preferences
Changes in consumer preferences and demographic trends, including in response to unfavorable economic conditions, could negatively impact our business
52% rewrittenRisks Related to Regulation and Litigation
We may be subject to litigation that could adversely affect us by increasing our expenses, diverting management attention, or subjecting us to significant monetary damages and other remedies
48% rewrittenRisks Related to Executing Our Business Strategy
Our fresh delivery business channels depend on key customers and are subject to risks if such key customers reduce their purchases or terminate their relationships with us
Was: Our DFD business channels depend on key customers and are subject to risks if such key customers reduce their purchases or terminate their relationships with us
42% rewrittenRisks Related to Ownership of our Common Stock
Provisions of Delaware Law, our certificate of incorporation, and our bylaws create obstacles for third-party acquisition attempts without the consent of our Board of Directors or JAB, our largest stockholder
Was: Several provisions within Delaware Law, our certificate of incorporation, and our bylaws are designed to create obstacles for third-party acquisition attempts without the consent of our Board of Directors or JAB Holdings B.V. ("JAB"), our largest beneficial shareholder
40% rewrittenRisks Related to Regulation and Litigation
Our business may be adversely affected by litigation, regulation and publicity concerning food or occupational safety, quality, health, and other issues, which could negatively affect public policy and consumer preferences toward our products
Was: Our business may be adversely affected by litigation, regulation and publicity concerning food quality, health, and other issues, which could negatively affect public policy and consumer preferences toward our products
39% rewrittenRisks Related to Ownership of our Common Stock
If the ownership of our common stock continues to be highly concentrated, it may limit stockholders other than JAB from influencing significant corporate decisions and may result in conflicts of interest
Was: If the ownership of our common stock continues to be highly concentrated, it may prevent shareholders from influencing significant corporate decisions and may result in conflicts of interest
38% rewrittenRisks Related to Our Human Capital
Changes in the cost of labor could adversely affect our business, financial condition, and results of operations
Was: Changes in the availability or cost of labor could adversely affect our business, financial condition, and results of operations
37% rewrittenRisks Related to Cybersecurity, Data Privacy, Information Technology, and Internal Controls
Breaches or failures of our information technology systems or other cybersecurity or data security-related incidents have and may in the future have an adverse effect on our business, financial condition, and results of operations
33% rewrittenRisks Related to Ownership of our Common Stock
The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets
32% rewrittenRisks Related to Ownership of our Common Stock
Moreover, JAB wields substantial voting power over shares of our common stock eligible to vote in director elections and other shareholder votes through its affiliate, potentially influencing outcomes significantly
31% rewrittenRisks Related to Our Global Expansion and Growth
Political, economic, currency, and other risks associated with our international operations could have a material adverse effect on our and our international franchisees’ operating results
29% rewrittenRisks Related to Cybersecurity, Data Privacy, Information Technology, and Internal Controls
We rely on information technology in our operations. Any material failure, inadequacy, or interruption of that technology has and may in the future adversely affect our ability to effectively operate our business and result in financial or other loss
22% rewrittenRisks Related to Our Supply Chain
We have limited vendors for many of the product components and services that we rely on, and we have a single vendor for our glaze flavoring. Any interruption in supply could impair our ability to make and deliver our signature products, adversely affecting our business, financial condition, and results of operations
21% rewrittenRisks Related to Crises, Catastrophic Events, and Business Continuity
Adverse weather conditions, natural disasters, war or terrorist attacks, pandemics, or other catastrophic events could have a material adverse effect on our business
Was: Adverse weather conditions, natural disasters, war or terrorist attacks, pandemics, or other catastrophic events could have an adverse effect on our business

All 42 risk factors

Headings as the filing states them, in filing order.

Risks Related to Food Safety and Consumer Preferences

01Our business may be adversely affected by food safety issues, including food-borne illnesses, tampering, contamination, or cross-contamination67% rewritten
02Changes in consumer preferences and demographic trends, including in response to unfavorable economic conditions, could negatively impact our business60% rewritten

Risks Related to Cybersecurity, Data Privacy, Information Technology, and Internal Controls

03We rely on information technology in our operations. Any material failure, inadequacy, or interruption of that technology has and may in the future adversely affect our ability to effectively operate our business and result in financial or other loss29% rewritten
04Breaches or failures of our information technology systems or other cybersecurity or data security-related incidents have and may in the future have an adverse effect on our business, financial condition, and results of operations37% rewritten

Risks Related to Executing Our Business Strategy

05We may be unable to successfully execute our business strategy, including our turnaround planNew
06We may not realize the anticipated benefits from past or potential future acquisitions, divestitures (including refranchising), investments, or other strategic transactions100% rewritten
07Our past strategic transactions have not always yielded, and future strategic transactions may not yield, the anticipated benefits, and could negatively impact our reputation and have a material adverse effect on our business, financial condition, and results of operationsNew
08We have limited influence over the operations of our franchisees and subfranchisees, and any failure by them to operate effectively or to maintain safety and quality standards in compliance with applicable law could have a material adverse effect on our operating results and reputationNew
09Our fresh delivery business channels depend on key customers and are subject to risks if such key customers reduce their purchases or terminate their relationships with us48% rewritten
10Our reputation and brand image are essential to our business success and a failure to protect our brand image could have a material adverse effect on our business, results of operations or financial condition87% rewritten
11Our success depends on our ability to compete with many food service businesses
12If we cannot keep pace with technological changes impacting our industry, we may be unable to compete effectively, and our results of operations could be negatively affected
13Our significant indebtedness could adversely affect us, including by decreasing our business flexibility and increasing our interest expense86% rewritten

Risks Related to Our Global Expansion and Growth

14A key portion of our growth strategy depends on opening new and maintaining existing Krispy Kreme shops and Points of Access both domestically and internationally82% rewritten
15Our future growth and profitability will depend on our ability to successfully accelerate international development with strategic partners and joint venturesNew
16We face risks as we continue to focus on profitable expansion of our fresh delivery and digital channelsNew
17Political, economic, currency, and other risks associated with our international operations could have a material adverse effect on our and our international franchisees’ operating results31% rewritten

Risks Related to Our Supply Chain

18We are the exclusive or primary supplier of doughnut mixes and other key ingredients to shops worldwide and any problems supplying these ingredients could negatively affect our and our franchisees’ ability to make doughnuts
19We are the only manufacturer of our doughnut-making equipment. Any problems producing this equipment could negatively affect our shops’ ability to make doughnuts
20We have limited vendors for many of the product components and services that we rely on, and we have a single vendor for our glaze flavoring. Any interruption in supply could impair our ability to make and deliver our signature products, adversely affecting our business, financial condition, and results of operations22% rewritten
21Our reliance on a single vendor for nearly all distribution of materials and supplies in the U.S. and Canada poses risks to our and our franchisees’ ability to make doughnuts if the vendor fails to provide these materials and supplies for any reason64% rewritten
22We may be unable to secure an alternative distribution channel in a timely manner or at all to mitigate these disruptions and challenges. In some cases, we may need to temporarily halt production at the affected shops until suitable alternative arrangements can be put in place
23Our profitability is sensitive to changes in the cost of raw materials and other commodities and we may not be able to increase prices to fully offset inflationary pressures on costs, which may adversely affect our financial condition or results of operations

Risks Related to Our Human Capital

24An inability to recruit and retain personnel could have a material adverse effect on our operations98% rewritten
25Changes in the cost of labor could adversely affect our business, financial condition, and results of operations38% rewritten

Risks Related to Regulation and Litigation

26We may be subject to litigation that could adversely affect us by increasing our expenses, diverting management attention, or subjecting us to significant monetary damages and other remedies52% rewritten
27Our business may be adversely affected by litigation, regulation and publicity concerning food or occupational safety, quality, health, and other issues, which could negatively affect public policy and consumer preferences toward our products40% rewritten
28Furthermore, we may face significant liabilities from any such lawsuits or claims that result in unfavorable judgments or due to litigation costs, regardless of the final outcome63% rewritten
29Healthcare legislation and potential employment legislation could adversely affect our business, financial condition, and results of operations
30Changes in tax laws and regulations could have a material impact to our tax expense or cash tax obligationsNew
31Our annual effective income tax rate can change materially as a result of changes in our geographic mix of U.S. and foreign earnings and other factors, including changes in tax laws and changes made by regulatory authorities90% rewritten
32The full realization of our deferred tax assets may be affected by a number of factors, including future earnings and the feasibility of ongoing planning strategies60% rewritten
33We may be affected by matters related to environmental, social, and governance (“Responsibility”) trends and events, including governmental regulation and supply chain disruptions, that may adversely affect our business and reputation
34Recent years have seen the introduction of new Responsibility disclosure requirements in various jurisdictions. The evolving nature and complexity of these rules and regulations, together with evolving stakeholder expectations, render compliance more challenging and uncertain

Risks Related to Our Intellectual Property

35Our failure or inability to obtain, maintain, protect, and enforce our trademarks or other intellectual property could adversely affect our business and the value of our brand

Risks Related to Crises, Catastrophic Events, and Business Continuity

36Public health outbreaks, epidemics, or pandemics have disrupted and may in the future disrupt, our business, and could have a material adverse effect on our business, financial condition, and results of operations
37While we have implemented measures to address significant public health risks on a large scale, we acknowledge the potential for future outbreaks to impact our shops and other facilities. Such outbreaks may result in a substantial portion of our workforce or the workforce of our business partners being unable to work
38Adverse weather conditions, natural disasters, war or terrorist attacks, pandemics, or other catastrophic events could have a material adverse effect on our business21% rewritten

Risks Related to Ownership of our Common Stock

39Provisions of Delaware Law, our certificate of incorporation, and our bylaws create obstacles for third-party acquisition attempts without the consent of our Board of Directors or JAB, our largest stockholder42% rewritten
40Moreover, JAB wields substantial voting power over shares of our common stock eligible to vote in director elections and other shareholder votes through its affiliate, potentially influencing outcomes significantly32% rewritten
41If the ownership of our common stock continues to be highly concentrated, it may limit stockholders other than JAB from influencing significant corporate decisions and may result in conflicts of interest39% rewritten
42The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets33% rewritten

Other Krispy Kreme 10-Ks

FY2024 10-K risk factors
42 risks
Krispy Kreme's risk profile is dominated by supply chain vulnerabilities, heavy reliance on single vendors like BakeMark, and expansive franchise operations. Financial leverage and significant ownership concentration by JAB Holdings present additional primary operational and governance constraints.
Filed Feb 27, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.